Sri Lankan shares hit near 3-wk closing high on eurobond issue

Reuters Staff

COLOMBO, July 12 (Reuters) - Sri Lankan shares closed at
their highest in nearly three weeks on Tuesday, the fifth
straight session of gains, as confidence in a new sovereign bond
issued by the island nation helped boost investor sentiment.

Sri Lanka raised $1.5 billion in its first sale of
dual-tranche eurobonds on Monday, at a lower borrowing cost than
initially expected, as yield-hungry global investors put in over
$5.5 billion in offers.

The benchmark Colombo stock index ended 0.5 percent
higher at 6,401.31, its highest close since June 22. It gained
1.3 percent last week, its first weekly gain in four.

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Investors, mainly local, bought into battered stocks after
recent losses, although the day's turnover was moderate.

"We see some investor confidence after the sovereign bond
sale. It shows there is a huge demand for Sri Lankan bonds.
Market expects some of these foreign investors might come into
shares in future," a stockbroker said asking not to be named.

Turnover stood at 562.6 million rupees ($3.87 million),
below this year's daily average of around 736 million rupees.

Shares have been on a downward trend recently, hitting their
lowest close since April 7 on Monday after falling for 10 out of
11 sessions, on worries over a capital gains tax on stocks, high
interest rates and policy uncertainty.